Good day, and thank you for standing by. Welcome to the Investor call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session on the phone lines, you will need to press star one on your telephone keypad. Alternatively, you can submit a question on the web by clicking on "Ask a Question" at the top of your screen. Please be advised that today's conference is being recorded. If you require any further assistance, please press star and zero. I would now like to hand the conference over to your speaker today, Constantin Baack, CEO of MPC Container Ships. Please go ahead.
Thank you, Operator. Good morning, everyone. This is Constantin Baack. I'm the CEO of MPC Container Ships, and I would like to welcome you to our call regarding yesterday's stock exchange announcement, in which we have announced that we have signed an agreement to acquire Songa Container AS. The press release, as well as the accompanying presentation for our call, are available on the Investor and Media section of our website. Please be advised that the material provided and our discussion today contain forward-looking statements and indicative figures. Actual results may differ materially from those stated or implied by forward-looking statements due to the various risks and uncertainties associated with our business. I would like to guide you through the presentation and then open up for a Q&A afterwards.
We are witnessing a historically strong charter market with charter rates at record high levels, while charter periods are getting longer and longer, and thus increasing cash flow visibility is present. We are definitely excited about this transaction in that context, and now I would like to start off the presentation by running you through some of the Songa Container acquisition characteristics, as well as a short company and market outlook. On this note, I would like to commence with page number four of the presentation. We are pleased to have signed an agreement to acquire Songa Container AS, and we deem this transaction highly beneficial for MPC Container Ships and our shareholders for a number of reasons.
Firstly, the transaction is backed by our strong belief in the sustainable container market fundamentals and the desire to take advantage of what we see is a significant lag between asset values and charter rates. I will explain that more concretely shortly in the course of the presentation. Secondly, the structure of the transaction creates an immediate and accretive impact to our earnings in a container market that continues to strengthen by the day. Thirdly, the transaction is a milestone transaction for MPCC, and we are particularly excited about the cash flow prospects of the combined fleet, which will come to the benefit of our existing and new shareholders in the coming years. You will see some indicative EBITDA figures on this slide, in particular the EBITDA generation for 2021 and 2022 ongoing.
Finally, there is also an aspect of very low residual value risk of the acquisition and pro forma MPCC, which I will allude to shortly, but we deem this to be a very attractive match with MPCC's DNA and our strategy. Very finally, we are obviously pleased to welcome renowned shareholders like Arne Blystad, Canomaro Shipping, and Klaveness Marine to MPCC. Now, please turn to Slide 5, which illustrates a few facts and figures on the Songa fleet and charter outlook. The fleet comprises upon transaction closing of our transaction 11 vessels between 1,000 TEU and 4,300 TEU, with an average age of 11years-12 years, a very interesting age bracket in our view, which matches very well with our existing portfolio and even brings down the average age slightly.
Nine of the vessels are scrubber-fitted, and three of the vessels are equipped with the highest Ice Class standard, well-suited for Baltic trades. If you look at the slides at the bottom, we have illustrated the fixed operating days and open operating days for Songa, as well as the upcoming fixtures for 2021. And on the basis of current spot rates and basically an average of the spot rates over the last five weeks, we derive at a, let's say, EBITDA sensitivity based on those rates at the bottom right-hand side of this presentation. We expect 2022 EBITDA on that basis to come in at around NOK 70 million-NOK 75 million for the acquired fleet. Now, please turn to Slide 6, where we provide a short overview of the transaction structure and transaction as such.
I will not read out all the points, but leave rather some room for questions at the end. But I think in summary, we agreed to acquire the Songa Container AS at a purchase price of NOK 210 million, roughly. It is further agreed that approximately NOK 115 million of the purchase price, taking into account Songa's cash and net working capital, will be settled in cash. And this amount includes the refinancing of the outstanding debts of Songa Container AS. The remaining portion will be settled by way of issuing shares in MPCC based on an economic effective date of the transaction end of May 2021, when a mutual understanding was agreed between the parties. The cash component will be fully funded via a two-year acquisition financing facility provided by DNB at what we deem attractive terms, highly flexible.
It shows our ability to transact quickly in this market and make use of opportunities as they arise. Now, please turn to Slide 7 to explain what we deem is a compelling transaction rationale. Firstly, it reinforces our industry-leading position with a market cap of about $1 billion. We see a very attractive repayment and de-risking risk-reward scenario here with payback periods of the purchase price below three million, sorry, below three years. We believe that in the current very attractive market, this fleet caters for a very attractive additional exposure to chartering activity in order to benefit from the lagging behind of asset values versus charter rates. So we believe this will be a very accretive transaction. And lastly, a very strong earnings potential somewhere between 350 million and 450 million for 2022 and 2023, expected on the basis of the current rate and price.
Looking at Slide 8, we show the effects of the Songa transaction on our market position in the intraregional markets and our market cap and key balance sheet figures. We reinforce our industry-leading position in intraregional trades, the subsector which we deem has the most compelling demand and supply fundamentals going forward. And on the right-hand side, you can see that we are also benefiting by increasing the market cap of the company, which we believe is a very important and attractive step in making MPCC a very interesting investment opportunity for investors. Now, please turn to Slide 9, where we look at the de-risking of the Songa acquisition from left to right.
We start with the purchase price, and then we look at second half 2021 EBITDA expectations, scrap value of the fleet, and basically the risk-adjusted purchase price, which would then be below two times the EBITDA that we foresee for 2022. All in all, we assume this being a very attractive payback and de-risking perspective. Based on the expected EBITDA for 2022, we look at an EV/EBITDA of less than three times, which we deem attractive. Moving on to Slide 10, we illustrate the decoupling of asset values and charter rates, also based on live examples. So the blue line shows the time charter rate for a 2,800 TEU container ship, and the red line shows the 15-year second-hand value.
We are, on the right-hand side, illustrating, in addition, a recent fixture that we have conducted for one of our vessels, a three-year contract net of commissions above $31 million, sorry, $31,000 per day, and this translates into a significant upside when you look simply at the secured EBITDA plus scrap compared with the charter-free value of such a vessel. Overall, we believe that this is a very attractive point in the cycle where you can actually add tonnage at fairly low risk and de-risk that immediately and actually also arbitrate on the lagging behind of asset values and charter rates. Now, let me turn to the company and market outlook before we open the round for questions.
Here, we look at the combined fleet on a pro forma basis, looking at the existing charter or fixed days from left to right of the combined entity for 2021, 2022, 2023, as well as the upcoming fixtures for the next 12 months. As you can see, we are pretty much geared towards a number of fixtures in Q3 and Q4, but some additional fixtures also in the course of the first two quarters of next year. We believe this is a very attractive market exposure and charter opportunity to lock in rates. And as a matter of fact, just to give you one example of the charter environment as it stands, we are looking basically at two- to three-year charter rates, charter periods at the moment.
Now, on the right-hand side, we have then looked at, obviously, our revised guidance on the back of pro forma figures, including the Songa fleet, assuming a closing of the transaction in the course of July. We look at a revised guidance for full year 2021 of NOK 170 million-NOK 180 million in EBITDA. For 2022 and 2023, we see capacity of NOK 350 million-NOK 400 million for 2022 and NOK 450 million- NOK 500 million in EBITDA for 2023 on the basis of current market environment. And again, some of the charters can be locked in for up to three years, securing significant cash flow. Now, let's spend some time on the market because it's obviously a very dynamic market environment over the last couple of weeks and months. What we have shown here on Slide 13 is the time charter rate development for the relevant sizes, as well as the average periods.
Periods increased significantly on the top right, while rates also increased. And that, in combination, leads to a very limited supply of tonnage and trading, basically in their redelivery range at the bottom left, and shows that the asset market is expected to be very, very tight for the foreseeable future, which we believe will lead to a sustainable charter market environment going ahead. Just as an example, and looking at the charter rates, this is basically a reflection of the market. The tricky part is to see whether this is a one, two, or three-year charter. I would like to give you an example. We just recently fixed a 2,800 TEU container ship for a short period before dry dock of 65 days-80 days, a charter rate above $100,000. And I have to repeat that number because it's not on this graph.
So it's a 2,800 TEU container ship at a rate above $100,000 for 65 days-80 days. That alone gives a significant EBITDA potential, and we see similar requirements in the market as we speak, next to period business in line with what I have alluded to earlier. So this is a very attractive and historic environment. And on that note, I would like to move on to the supply-demand situation. We see a supply deficit, which is even more pronounced in our segment, the intraregional segment, both in terms of demand and supply. As you can see from this chart showing on the left-hand side the total demand and supply, and on the right-hand side, the intraregional dynamics. We believe that the supply side for the foreseeable future is basically carved in stone.
Although we have seen a number of new orders, and I'll allude to that in a minute, there is a very significant deficit when you look at the supply for the smaller units for the trades that we service, and we therefore believe there is a sustainable shortage of tonnage for the next 12 months-24 months in any event. Now, let me conclude the market section with an outlook on the supply shortage and the order book versus age profile. Also there, we can see on the top left that the order book remains geared towards the very large ships, not just where it stands today, but also where the significant activity has actually been seen over the last couple of six months-to-nine months.
In the smaller sizes, we actually, on the basis of the age profile of the fleet shown on the top right, with almost 40% of the fleet being above 15 years of age, we see a significant demand actually for new tonnage, which is not in the order book as it stands today, so we believe, on a, let's say, two- to three-year horizon, that unless there is a significant demand disruption, which we can never rule out, but which we believe will not happen at this point in time from today's perspective, so we believe the supply side supports our investment in Songa, but also our path forward. Now, a few concluding remarks before I open the round for questions. We really expect to see the continuation of a very compelling market development in 2021 and 2022, and we are destined to take part in this.
The Songa transactions enable us to benefit from that even more. We firmly believe it is the combination of the strong cash generation and, at the same time, having an extremely low residual value risk, as well as our prudent capital allocation strategy, which makes up our attractiveness as an investment and as a company in this market. On that note, I would like to hand back over to you, Operator. I'm looking forward to receiving your questions and the discussion.
Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad, and your name will be announced. Alternatively, you can submit a question via the web. As a reminder, that's star one to ask a question via the phone lines, or you can submit a question via the web.
And your first question via the phone line comes from the line of Eirik Haavaldsen. Please go ahead. Your line is now open.
Yes. Hi. It's a good note that you ended with mentioning your capital allocation policy because can you maybe clarify or update us on the strategy going forward? I mean, as you laid out, this seems like a perfect acquisition for you, a very good strategic fit, seems accretive, etc. But how should we now assume that you will allocate this cash flow going forward? I mean, thinking about bond repayments, dividends eventually, or further acquisitions as you see opportunities.
Yes. Thanks. That's a relevant and good question, obviously. And I mean, the way we look at it at this point in time is that we have identified this acquisition as the best use of our capital at this point in time.
We were able to finance it through a good combination of acquisition finance and issuance of shares. Going forward, we believe the next step will be an optimization of our balance sheet. I would name it that. We still have a few financing silos that we want to streamline and to optimize in order to then be in a position to use our balance sheet capacity and earnings capacity in the most flexible way. Obviously, a key ingredient is servicing the debt, potentially financially delivering even more. I think that is something that we certainly would consider. And obviously, also looking at accretive transactions like the one that we have conducted now. And of course, very relevant, but something that we will rather communicate later this year once we have addressed the optimization of the balance sheet, is also returning capital to investors.
I mean, with this cash flow perspective that we have for this year and certainly next year and the year thereafter on the basis of the market, how we see it, a clear dividend policy will be articulated or capital allocation policy rather towards the end of this year. We will, as I said, have an optimization of the balance sheet in front of us. And we still have a number of charters to fix. And once we have good visibility on next year and, let's say, a slightly optimized balance sheet, that is the point in time when we will communicate on that in a bit more detail.
Okay. Thank you. And just on the market, I mean, you highlighted the fantastic kind of short-term time charter levels we see now.
But at the same time, you're able to relatively confident guide on very strong numbers in 2023 with only, as far as I can see, still less than 20% of those days booked. How are you now thinking when it comes to new fixtures over the coming three months, three to six months, those you have coming up? We see that you have done most for 24 months- 36 months. But is it becoming increasingly tempting to do more short-term because of the obscene levels you're seeing? Or is it still the intention to de-risk 2023 as much as possible?
That's a very fair and good question. I mean, first of all, the 2022 and 2023 figures are basically an indication. They're not our clear guidance, right? We have run some sensitivities with current spot rates.
As you alluded to, there is still more than 80% of days open for 2023. Having said that, with the upcoming fixtures, we would opt at those levels to go long to benefit from the currently strong market and lock in charter rates for longer. We do have, by virtue of our fleet, a staggered charter book, so to say, because we have a few dockings coming up. I alluded to this or I gave the example of this one 2,800 TEU ship that we were able now to fix for 65 days-80 days above $100,000. So these are opportunities that relate to a position between charter end and the next dry dock. If you can optimize that, then I think we are well positioned to play that very smartly.
Then you can basically lock in a cash flow of around 8 million, which is the price within 80 days, which is the price of the vessel that we bought a few years back. So just to give you an example, this is obviously something we would explore. But we think that current charter rate levels for period business is at very attractive levels. And we would definitely, on the majority of vessels, opt for longer periods.
Great. I agree. And finally, just the range of 48 million-50 million shares in compensation. At NOK 24 million, I see your share was just suspended because of a strong movement. But at current share price, is it going to be then 48 million shares printed?
Yes. That's the expectation. Yeah.
Thank you very much. And I guess congratulations on the strong transaction.
Thank you very much.
Thank you.
And as a further reminder for those on the phone, if you would like to ask a question, please press star one on your telephone keypad.
If there are no further questions through the line, then we have a number of questions through the web, which I'm happy to read out and answer right away. And I would start with a question by Arthur Hellan, who inquires whether we have looked at other shipping companies. He named Ernst Russ, etc. So we are obviously screening the market. I think the transaction needs to fit both in terms of charter exposure, open position, quality of vessels, etc. So we are definitely exploring alternatives as well. We believe this was the most attractive deal from a combination perspective in our view. But we're obviously open to look at other things as well.
Then there's another question of Christopher Callison, appreciating the attractiveness of the deal. And then he asked about any plans for MPC's outstanding bond. As I mentioned in the answer just earlier, we are now, as a next step, we want to approach an optimization of our balance sheet. And of course, the bond is a very important part of that. And we will address that in the not too distant future, in our view. Then there's a question of Ulrik Mannhart, who asked how much or any cash and net working capital is included. So we look at a locked box scheme end of May. So the net working capital and cash end of May was around NOK 9 million-NOK 10 million. However, there's obviously also earnings being generated until closing, which are for our account. So those are the numbers. Then there's a question of Eden Valleur.
Will MPC complete more acquisitions going forward? That remains to be seen. I think we are very happy with this transaction. We will obviously work our way through this. We are definitely open to look at other opportunities going forward. There's Tim Wu asking, is there any thought at this stage to refinance the DNB loan with a longer tenor bond? Well, we explore all options. There's no kind of plan carved in stone yet. As I said, with a strong cash generation and delivering capacity, we believe we have a variety of options going forward. Just checking whether there are further questions through the web. No, there are no further questions through the web. Moderator, back to you in case there are questions through the line.
Are there no further questions on the phone lines?
Okay.
Then, we probably wait one more minute if something comes up through the web or through the telephone line. That does not seem to be the case. Operator, I would hand back to you. And I thank everyone for listening in and for the interest. And we are obviously, as I said, excited about this transaction and reaching a closing in the course of July. And we look forward to the rest of 2021. And on that note, Moderator, back to you for closing. Thank you.
Thank you. That does conclude the call for today. Thank you for participating. You may all disconnect.